In a press release dated 30 March 2020, the European Commission (the “Commission”) announced the approval of France’s new aid scheme – the «Fonds de solidarité» or «Solidarity Fund»- aimed at supporting small enterprises in temporary financial difficulties due to the COVID-19 pandemic.
The Commission found the measure to be necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the State aid Temporary Framework adopted on 19 March 2020 (see our newsletter dated 20 March 2020 via the link below).
I – What is the “Fonds de solidarité” or “Solidarity Fund”?
The measure has an estimated budget of €1.2 billion. In addition to other possible measures or aids, it allows for direct grants in favor of small and micro-enterprises, as well as self-employed people fulfilling the eligibility criteria (see below). These direct grants are tax-free. The aim of such a scheme is to prevent the cessation of activity of these undertakings.
The aid scheme is twofold:
The first scheme allows undertakings to benefit from a direct grant which is equal to the undertakings’ declared loss of turnover in March 2020 but which may not exceed EUR 1,500.
The second scheme enables the grant of an additional lump sum aid of EUR 2,000 to the most affected undertakings that have at least one employee. This aid can be obtained when:
- The undertaking is unable to pay debts which are due within the next 30 days;
- The undertaking’s bank refused to grant a liquidity loan of a reasonable amount.
The total grant cannot exceed EUR 3,500 per company.
II – Who can be a beneficiary?
The scheme is intended for small and micro-enterprises, as well as self-employed people with:
- A maximum of 10 employees; AND
- A yearly turnover not exceeding EUR 1 million; AND
- A taxable annual profit not exceeding EUR 60,000.
Companies are eligible when:
- Their business was closed by administrative decision as a result of the coronavirus outbreak; OR
- Their monthly turnover in March 2020 dropped by 70% compared to their turnover during the same period last year (NB: if the structure did not exist in March 2019 then the average monthly turnover will be taken into account).
The economic operator’s/agent’s activity must have started before 1 February 2020 and no declaration of cessation of payments must have occurred prior to 1 March 2020. Moreover, those who have employment contracts or retirement pensions, as well as entrepreneurs that benefited from a least 2 weeks of sick leave cannot benefit from this aid.
III – How to apply?
As regards the first scheme: It will be possible to apply on 1 April 2020 via impots.gouv.fr. The DGFiP will conduct a first level review and will quickly provide financial assistance to the applicant. Second level controls may then be carried out once the financial aid has been granted.
As regards the second scheme: it will be possible to apply from 15 April 2020 on a dedicated platform opened by the region in which the undertaking carries out its activities.
Please find hereafter our legal news on Competition Law concerning all the measures implemented in France in connection with the COVID-19 crisis: